Bureaucracy ‘off the pace’ in digital world

Peter Shergold looks forward to a second wave of outsourcing.
Photo: Nic Walker

by
Seamus Jameson

When it comes to outsourcing government services, the consensus in the public and private sectors is it will continue to expand while teething problems remain.

Peter Shergold
, who oversaw the Howard government’s outsourced Job Network scheme, recently told The Australian Financial Review that his belief at the time was if it was done right, it would mean a range of different services delivering choice to consumers.

However, he asserts, the federal bureaucracy has fluffed its lines in recent years as it has sought to wrest back ­control, constraining services and enforcing uniformity.

“We need to step back, say we’re going to focus on outcomes, we are going to commission delivery but we’re going to let different organisations do it their own way.

“More than that . . . we’re going to let them help co-design the program. Not just assume that we’ve got all the knowledge in the public service," says Shergold.

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Economist
John Edwards
believes the federal government has been transformed in the past few decades. “It is far more concentrated on policy provision than service delivery.

“We’ve had several decades of experiments with market delivery or private sector delivery of services. By and large, a lot of those have been successful," he says, adding we have to bear in mind the public/private debate is operating primarily at the state and local government level.

For Australian Services Roundtable CEO
Ian Birks
, outsourcing has a long way to go because government is a long way off the pace in our increasingly digital culture.

“If we look at private sector organisations like banks and airlines and telecommunications companies, they’ve been able to develop service delivery methods that have been highly effective across the whole spectrum of society and business," says Birks.

“They’ve been able to do that in an almost ‘digital first’ culture – that puts digital at the front of it all. Government just hasn’t moved down that path in anything like the same kind of way."

Looking forward to second wave of reform

The Australian Chamber of Commerce and Industry’s
Kate Carnell
believes the efficiencies of outsourcing should be applied to federal and state duplications of bureaucracy.

“If states are going to run health, why do we have a federal Department of Health?" she says.

“It strikes me that the role of the federal government is to set standards and not put huge amounts of infrastructure behind those standards. Set standards and get away from it, which would be a huge change."

Shergold says he looks forward to a second wave of reform in outsourcing as the pace has slowed appreciably.

“There is no doubt, looking back 15, 20 years that outsourcing, particularly outsourcing by the Commonwealth and state governments of human services, has transformed what’s gone on," he said.

“I think [at] the Productivity Commission, we’ve probably got $30 billion worth of human services that are being outsourced and delivered through not-for-profit organisations or social enterprises.

“On the whole you’ve got better value for money. It has been delivered at lower cost and with higher service ­standards. The trouble is, until now – and I was a part of this – it has been almost entirely transactional. It’s been a contracted relationship. So the government decides on programs and then we go out to tender. We have service agreements that predominantly the not-for-profit service deliver.

“Unfortunately it has been a huge waste because the one thing we should have got out of outsourcing or out of commissioning is innovation and we haven’t."